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Impact of new property cooling measures will only be seen in August 2018 sales

Published Date : 16/07/2018

Developers sold a total of 654 private residential units in June, down 41.7% from May’s sales of 1,122 units. Historically, new home sales in June tend to fall slightly due to the June school holidays, where buying activity slows and home buyers go on holiday. As such, developers tend to hold back launches during this period, leading to lower volumes. On a y-o-y basis, total volume fell by 20% from June 2017 sales of 820 units. The lower volumes seen in 2018 is partially due to lower unsold inventories in existing launches. There are limited choices for buyers in the market now so some buyers could be waiting on the sidelines, in anticipation for future launches. As such, we could see fluctuations in monthly sales tallies depending on the new projects launched during that month.

Nonetheless, 3 major new projects (>100 units, else there were a total of 5 new launches) were launched in June, namely Affinity @ Serangoon, The Garden Residences and Margaret Ville. Sales performance was disparate across projects. Margaret Ville sold a total of 121 units out of 309 units and is 39% sold out, while Affinity At Serangoon and The Garden Residences sold 107 units (out of 1052 units) and 64 units (out of 613 units) respectively. The relatively weaker performance of Affinity At Serangoon and The Garden Residences could be attributed to the close proximity and similar launch timing of both sites, which led to stiff competition for demand. Buyers could have also baulked at pricing levels as both sites were launched at above $1,550 psf, a benchmark for the vicinity.

Despite the sudden roll-out of new cooling measures this month, July volumes are expected to see a jump, driven by the front loading of property purchases to beat the new cooling measure dateline. July’s volumes are distorted by the front loading of purchases and is not an indication of true market demand. The true impact of the new cooling measures will be seen in August, as sales are hit by a double whammy; market slowdown due to cooling measures and the hungry ghost festival which starts in mid Aug to early Sept, when buyers tend to avoid buying property. August sales could potentially fall by around 40 - 50% from July’s sales as the market adjusts to the new cooling measures.

Nonetheless, market fundamentals remain unchanged. Although geopolitical tensions and the new round of cooling measures have injected some uncertainty into the market, the property market is still positioned for growth. Singapore’s economic outlook remains firm and Singapore aggregated household balancesremain healthy and flush with cash. Furthermore, downside risks remains relatively low due to current cooling measures and loan curbs. Despite a higher barrier of entry, the value proposition of the Singapore residential sector remains attractive.